Teen needs smaller emergency fund

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February 17, 2007

By Dave Ramsey, Commentary The Enid News and Eagle Sat Feb 17, 2007, 10:27 PM CST

Dear Dave: My daughter is 17, in high school and has a car and a part-time job. Should a teenager have an emergency fund? If so, how much money should they set aside? — Darlene

Dear Darlene: Three to six months of expenses is what I recommend for adults, and that’s generally a good rule of thumb for teenagers, too. But she won’t need as big an emergency fund as a married couple with kids if her expenses consist solely of her car and her social life.

I’d suggest saving up about three months worth of what it takes to operate the car — gas, maintenance and insurance. Those are her financial needs right now.

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Dear Dave: My brother and I recently received an inheritance after our mom died. He’s never been very good with money, so I was proud of him when he used his portion to pay off his debts. But then he went out and financed a $23,000 van I know he still can’t afford. I’m afraid he’s falling right back into the same old money problems, but I don’t know how to talk to him about it. — Diana

Dear Diana: Over the years I’ve learned you can’t make people listen to you. Even with what I do for a living I don’t throw my opinion around unless someone asks.

I think you’re smart for realizing there are some boundaries here. But there’s no reason you can’t create a situation where he can ask your opinion. You might begin with talking about some of the mistakes you’ve made in the past. This could help him connect with you and feel more comfortable opening up about his own situation. Once he realizes you haven’t repeated the same mistakes and have a better life for it, he might just ask how you did it. Then, the door is open!

But you can’t become preachy every time someone does something dumb. That will only hurt their feelings and cause them to tune you out completely.

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Dear Dave: My wife and I both agree we need to get a will, but we don’t know where to start. Can you help? — John

Dear John: First, find a good estate attorney who does wills. In your situation, I’d suggest a mirror image will.

All this type of will does is switch the names on the documents. Otherwise, they’re identical. If you die your wife gets everything, and if you die, she gets it all. If something really awful happens and you both die at the same time, then everything is dispersed according to what you both want.

A mirror image will usually doesn’t cost as much as having two separate wills drawn up, either. Or for an inexpensive will, check out www.uslegalforms.com.

You can find more advice on money management, small business and mortgages at www.davesays.org. The Lampo Group Inc.

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